Working Capital Diagnostic
Reference model
Understanding the components of working capital helps in diagnosing cash flow issues.
About this model
A structured approach to evaluate working capital components such as inventory, receivables, and payables to enhance liquidity and operational efficiency.
Originator not stated.
How to read it
- Focus on the key metrics of working capital: inventory turnover, days sales outstanding, and days payable outstanding.
- Identify areas where the business can improve cash flow and reduce working capital needs.
What this does
Analyzes the efficiency of working capital management to identify opportunities for improvement and optimize cash flow.
When to use it
Use it when cash flow issues are impacting operations and you need to assess working capital utilization.
Not when: Do not use it when the business has stable cash flow and no immediate concerns regarding liquidity or operational efficiency.
What happens next
Develop an action plan to improve working capital based on the diagnostic results.
Golden thread
Builds on ←
- Cash Flow Analysis
- Inventory Management
- Accounts Receivable Management
Feeds into →
- Working Capital Improvement Plan
Use this tool, free
Sign in to open the worksheet. Your work saves as you type, the AI can draft the parts you have not filled in, and you finish with an analysis and a 30/60/90-day action plan.
Drafted with AI and reviewed by Eccellere on 04/11/2026. Guidance, not advice: apply your own judgement.